Dividend Stocks Can Work for You

In the boom days before the credit crisis, recession and general market uncertainty, many claimed the dividend was dead. After all, who cares about a 6% annual dividend when your stocks are making 25% to 50% gains a year? That changed, and an extra 6% in reliable cash became a necessity, but companies were cutting dividends to make up for lost revenues. We’ve now come full circle, and with the indexes up 70% from their 2009 lows, the question has become: What place does a dividend have in your portfolio?

A high yield can be a sign that the company is in trouble and won’t be able to keep its dividend intact, which means it will likely cut its payments. More than yield, you want to look at the company as a whole and the history of dividend payments. If a company has consistently made its dividend payments for years and has steadily raised those payments, you have a better bet of finding a strong company with a dividend you can bank on.

Source: InvestorPlace

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